Optimal Payments’ Billion Dollar Bet On Online Gaming

Optimal Payments and Skrill Group, two of the U.K.’s biggest digital wallet companies, are merging in a $1.2 billion deal that will create a combined company with $697 million in revenue, Reuters reported on Monday (March 23).

The deal will combine Optimal’s Neteller digital payment business with Skrill’s e-wallet service. The combined business will be able to handle more than 100 payment types in 41 currencies, and will have a strong foothold in payments for online gambling, eCommerce and digital media, the companies said in a prepared statement.

Skrill, which is one of the largest online payments and Internet money transfer companies in Europe, is one of only a few payments services that eBay allows sellers to accept for marketplace transactions. The company launched its own payments service for digital marketplaces last September.

But gambling will still be a strong focus for the combined company. “The U.S. [gaming] market, in particular, is just reopening and re-evolving,” Optimal CEO Joel Leonoff told Reuters. “Ultimately we’re looking at states like Pennsylvania and California to come online and this certainly establishes us as a very relevant supplier to the industry.” New Jersey, Nevada and Delaware have already approved Internet gambling.

Under the deal, Optimal will buy Skrill from a holding company owned by private equity firm CVC Capital, Investcorp Technology Partners and other shareholders for €720 million ($790 million) in cash and 37.5 million new shares (worth $148 million), along with taking on $280 million in Skrill net debt. Skrill investors will have a 7.9 percent stake in the combined company.

The deal is subject to approval by Optimal’s shareholders and regulators and is expected to close by Q3 of 2015, the companies said.